Distribution Sector

The distribution of electricity to end-users is a regulated common carrier business requiring a national franchise. Distribution of electric power to all end-users may be undertaken by private distribution utilities, cooperatives, local government units presently undertaking this function and other duly authorized entities, subject to regulation by the ERC.

A distribution utility has the obligation to provide distribution services and connections to its system for any end-user within its franchise area consistent with the distribution code. They are required to provide open and non-discriminatory access to its distribution system to all users.

According to the National Electrification Administration (NEA), the distribution sector is composed of 119 electric cooperatives, 16 privately owned utilities and six local government-owned utilities as of 2009. These distribution utilities may purchase electricity from generation companies or the WESM, when qualified, for distribution to residential, commercial, industrial and other users. NEA, the government agency mandated to implement programs to strengthen the technical capability and financial viability of rural electric cooperatives, may act as guarantor for purchases of electricity in the WESM by any electric cooperative or small distribution utility to support their credit standing.

Currently, the Manila Electric Company (Meralco) is the Philippines' largest distribution utility with a franchise area of 9,337 square kilometers covering Metro Manila, the entire provinces of Bulacan, Rizal and Cavite; parts of the provinces of Laguna, Quezon and Batangas; and 17 barangays in Pampanga. The franchise area is home to 23 million people, roughly a quarter of the entire Philippine population of 89 million.